NZ Trade And Enterprise
NZ Trade And Enterprise


Export Support

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Trade with New Zealand

March Supply Chain update

The first of NZTE's bi-monthly updates on Freight and Supply Chain.

8 Apr 20216 mins
News, Export, All of New Zealand, All Manufacturing, All Food & Beverage

Key update

  • NZTE has recently undertaken a survey of 993 of our customers. The findings from this survey have been sent to the Ministry of Transport (MoT) in support of continuing the International Airfreight Capacity (IAFC) scheme. Key information is included with this update.

  • Building on the success of the International Air Freight Capacity (IAFC) scheme, and with the prospect of a recovery in international travel now in sight, the Government has set up a new scheme to support air services through to the end of October 2021, with the potential for an extension to March 2022. This scheme ensures a predictable and regular schedule of air services to safeguard New Zealand's international connectivity. The support programme will be renamed the 'Maintaining International Air Connectivity' (MIAC) and will include slightly broader objectives.

Current state

  • Ongoing congestion in domestic and international ports combined with the ongoing availability issues for empty containers, are continuing to impact the reliability, consistency, and price of shipping. Airfreight capacity remains limited due to restricted global passenger travel.

  • COVID-19 has exposed that New Zealand and global supply chains are vulnerable and at potential risk as and New Zealand's connectivity has been affected.

  • NZTE customers need to be aware of freight challenges and plan for them to continue.

  • COVID-19 has also highlighted the critical role and importance supply chains play in the success and resilience of businesses – especially those that rely on imports and exports.

Key findings from NZTE's supply chain survey to export customers in January 2021

New Zealand's geographical isolation, the small size of our domestic market and the importance of speed to market, means it is vital to maintain global connectivity. The International Airfreight Capacity (IAFC) scheme has been an ongoing part of the export-led COVID-19 recovery for New Zealand.

As part of the recent review of the IAFC scheme, NZTE was asked to provide input by gathering customer insights: a first-hand account of the freight and supply chain challenges businesses are experiencing.

NZTE sent a survey to 993 of our customers to better understand how freight and supply chain disruptions are impacting New Zealand export businesses. The findings from this survey were sent to the Ministry of Transport (MoT) in support of continuing the International Airfreight Capacity (IAFC) scheme.

Freight connectivity is critical:

  • New Zealand's geographical isolation, our reliance on sea and airfreight and the importance of speed to market (especially for our advanced manufacturing customers), means it is vital to maintain connectivity to markets.

  • 65% of all customers plan to use airfreight for exports and 56% for imports in next 12 months

  • Steady use of sea freight for imports and exports

  • For both exports and imports, manufacturing customers are the highest users (versus F&B customers)

  • Manufacturing customers choice of airfreight as main transport mode has varied little since COVID-19, indicating more restricted in ability to change to sea freight compared to F&B customers

Freight options for customers are very limited, for some, non-existent:

  • Sea freight is not a substitute for some products due to type (size, weight, perishability) cost and customer demand (speed to market).

  • Manufacturing customers are strongly influenced by speed to market versus F&B customers which are more influenced by product type (size, weight, perishability).

Over 40% of customers have been strongly or critically impacted by transport disruptions:

Very few customers who responded are immune from the impact of freight disruptions:

  • 86% cited lack of certainty about timing of goods coming into or leaving NZ

    • 72% cited concerns about significant cost increases

    • 65% concerned about frequency of services

    • 38% mentioned the difficulty accessing raw materials/products (import issues become a more prominent issue now)

  • Impact: Cannot meet demand (over 50% customers), losing market share (more of an issue for manufacturing customers), financial impacts (incurring debt) and negative employment outcomes (more of an impact for manufacturing customers than F&B customers).

Loss of market share and access to key markets will hamper the export led recovery:

  • Customer stories highlighted current and future concerns around loss of market share and long-term implications (costly and time-consuming to rebuild relationships).

Businesses are doing all they possibly can to minimise transport disruptions:

  • Market has adapted: initially absorbed cost increases but now more likely to pass on, changed logistics processes and transport mode, changing markets and product type/offering.

  • Businesses have few levers left at their disposal.